The Central Bank, better known as Bacen, this week announced the reduction of compulsory deposits for companies, and also announced a line of loans with special rates to financial institutions this morning.
Why did the bank take this measure? Because the directors of Bacen reported that the decision is part of the set of actions taken by the BC to minimize the effects of the coronavirus (Covid-19) on the Brazilian economy.
The BC reduced the reserve requirement rate
The reduction was on term resources from 25% to 17%. According to the BC, the measure is temporary.
“The measure aims to increase the liquidity of the National Financial System”.
The Bank also clarified that the reduction of reserve requirements, resources that banks are required to leave deposited at the BC, could lead to the injection of up to R$ 68 billion into the economy, as of the 30th of this month.
But as everything predicts: On December 14, if the economy has gone through the Covid-19 pandemic, the rate of the reserve requirement on term resources will be reset to the previous level of 25%”, declared the Bacen to the press.
Loans for companies and institutions.
The Central Bank also announced that the National Monetary Council (CMN) authorized it to grant loans to financial institutions guaranteed by debentures acquired between March 23 and April 30, 2020.
But according to information from the Central Bank, it is a Special Temporary Liquidity Line (LTEL). Here's what the bank said:
“The purpose of the line is to provide liquidity to the secondary corporate debt market, which is strongly affected by the recent turmoil in the international and national financial markets, as a result of the effects of the spread of the Coronavirus (COVID-19)”.
In addition, Bacen will maintain, as an additional guarantee, the reserve requirements of the bank in the same amount as the transaction.
“With this measure, the BC hopes to increase liquidity in the secondary private debt market, minimizing the effects of the crisis on the capital market”, he highlighted.
How is the fundraising after this measure?
It was also made clear that “the uncertainties caused by the global health crisis on the economy have increased risk aversion and can negatively interfere in the raising of funds by financial institutions”.
Finally, the bank reported that:
“To reinforce the capacity to respond to the regular functioning of the National Financial System (SFN), the National Monetary Council (CMN) today approved Resolution No. )”.
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Source: G1.
